LinkedIn, the first major US social network to go public, saw its valuation rocket to $8.5bn (£5.3bn) after its flotation on the New York stock exchange on Thursday – $5bn higher than anticipated.

Shares in LinkedIn traded hands at $90 each in the opening minutes of its market debut – almost double what the company expected to earn on Wednesday evening.

LinkedIn's stellar NYSE debut is the clearest sign yet that stock markets are in the grip of a new technology and digital media bubble, fuelled by the ever-larger valuations of social media companies.

The business networking site, founded by the internet entrepreneur Reid Hoffman in 2002, raised $353m with its initial public offering on Wednesday evening, which valued the firm at $4.3bn. The firm last week said it was looking to raise $175m with the IPO.

LinkedIn's flotation makes it easily the highest valuation of a US internet firm since Google went public in 2004.

LinkedIn has about 100 million users and turned a profit of $15.4m on revenues of $243m in 2010. At $8.3bn, LinkedIn is valued at 35 times last year's revenues.

Though other social networks are far larger, notably Facebook with about 700 million users worldwide, the business orientation of LinkedIn's members make them potentially more valuable to advertisers. The company managed to grow through the recession and turned profitable last year, having made operating losses from 2007 until 2009.

LinkedIn offered 7.8m shares at $45 each – well above its previously expected price range of $32-$35. Hoffman, the co-founder and chairman, and the chief executive, Jeffrey Weiner, offered shares equating to less than 0.5% of the company.

Some of the firm's backers – Bain Capital Ventures, Goldman Sachs and McGraw-Hill – offered 3m shares in the IPO. LinkedIn offered a further 4.8m shares.

Other major investors – Sequoia Capital, Greylock Partners and Bessemer Venture Partners, which together own about two-fifths of the company – did not participate in the offering.

LinkedIn's flotation is expected to spark a social media goldrush, with some of the internet's most exciting – if not profit-making – companies going public.

Groupon, the online discount business which spurned a $6bn offer from Google in December last year, is expected to float this year, as is Zynga, the maker of popular Facebook games, FarmVille and CityVille.

The multibillion dollar flotations will also stoke investor appetite in Facebook, the world's largest social network, which is likely to dwarf the valuations of the internet firms that have recently gone public with its IPO, expected in the next 12 months. The company was valued at $50bn in January but its privately held shares have since traded at prices that suggest it could be worth more than $70bn.

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